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After The Close - The bears took hold of trading in the final session of the third quarter, which, for the most part, was a good three months for those long equities. Our sense is that some of the today’s selling was the product of portfolio managers wanting to lock in gains before the quarter came to a close. However, the portfolio rebalancing was by no means the only thing that prompted a modest selloff today. Concerns about the sovereign-debt problems in the euro zone, along with some disquieting U.S. economic data also contributed to the setback, which after some buyers returned to the market in the second half of trading, was pared a bit. Overall, declining issues led advancers on both the Big Board and the NASDAQ. 

The news from the other side of the Atlantic was far from uplifting—and not surprisingly, the major European bourses sold off sharply. Germany’s DAX and France’s CAC-40 finished 1.0% and 2.5% lower on worries about what the recent stress tests performed on Spain’s ailing banks would reveal, which had not yet been released when trading concluded on the Continent. Investors in France also did not like the budget that President Francois Hollande put forth today. The plan, which is heavy on taxes, was quickly criticized for lacking fundamental reforms that would jumpstart growth in Europe’s second-largest economy. Then, later in the day, the Bank of Spain said an independent audit of the nation's troubled banks showed they would need an extra €59.3 billion ($76.3 billion) to cover for further economic shocks. Investors, though, may take some solace in the fact that the results of the stress tests were in line with expectations, and that Spain’s government appears willing to take the necessary steps to avert a deepening crisis.

Meantime, the economy has been a bit of a lightning rod for investors on these shores in recent days. We received two uninspiring reports today, most notably the latest data on personal income and spending from the Commerce Department. The reading showed that personal income rose a meager 0.1% in August, while expenditures increased by 0.5%. The latter is the more troublesome aspect, as U.S. consumers had to stretch their spending budgets to pay for higher gasoline prices. If this trend were to continue, it could severely impact spending on disposable items over the next few months, which would not be a good backdrop heading into the all-important holiday shopping season. We also learned today that business activity fell sharply in the Midwest this month, as the Chicago PMI tumbled to 49.7 in September, from a reading 53.0 in August.

Next week will be another busy stretch for the U.S. economy, with reports due on manufacturing activity (Monday), vehicle sales (Tuesday), nonmanufacturing activity (Wednesday), and employment and unemployment (Friday). We will also receive the minutes from the last Federal Open Market Committee meeting on Wednesday, and the European Central Bank is scheduled to meet on Thursday.

There was some notable earnings news today—and as a whole made for a mixed reading. On the positive side were reports from the Finish Line (FINL) and Research in Motion (RIMM). The latter company reported relatively better-than-expected results, but investors should be aware that the BlackBerry maker still reported a loss and a full recovery will take a monumental effort, especially with fierce competition from Apple (AAPL) and phones using Google's (GOOG) Android OS. Meanwhile, shares of both Nike (NKE) and Walgreen (WAG) fell. Investors were disappointed with the apparel and footwear giant’s outlook, while the pharmacy company’s fourth-quarter results were weaker as it struggled to regain customers it lost due to a contract dispute with Express Scripts (ESRX). Looking ahead, with third-quarter reporting season still more than a week away from commencing, the earnings releases will be sparse next week, with the only notable reporters being Robbins & Myers (RBN), Monsanto Co. (MON), and Constellation Brands (STZ). 

With earnings news very light on these shores next week, we expect the focus of the investment community to remain on the U.S. economy and the soap opera in the euro zone. With the U.S. equity market overextended right now—the S&P 500 Volatility Index (or VIX) is still below 16—disappointing data on either of the aforementioned fronts could spark, at least the very least, a mild selloff of equities. - William G. Ferguson

At the time of this article's writing, the author did not have positions in any of the companies mentioned.

12:20 PM EDT - The U.S. stock market opened lower this morning, but is now paring its losses. At just past noon in New York, the Dow Jones Industrial Average is off 49 points (-0.4%); the broader S&P 500 Index is lower by six points (-0.4%); and the NASDAQ is off 14 points (-0.4%). The market’s breadth is still negative, but improving. Declining stocks are now outweighing advancers by about 2 to 1 on the NYSE. Weakness is evident in all of the market sectors, with sharp declines in the energy and basic material shares. As expected, the utility sector is holding up a bit better than the other areas, as traders tend to look for higher-yielding defensive names when the market turns down.

Technically, the S&P 500 Index had a decent session yesterday. But, volumes were light, suggesting that traders may not have been fully committed to that move. Today’s decline cancels out some of yesterday’s gains. We will have to monitor traders’ behavior as the session progresses to see if selling accelerates, or if some bargain hunters step in. If the S&P 500 pulls back over the next week or so, it may find support at its 50-day moving average located about 1,412, just about 2% lower than the current level.

The international markets offered limited help today.  In Asia, the markets put in a mixed session. Although China’s Shanghai Composite ended with a decent gain, there was considerable weakness on Japan’s Nikkei, after a weak industrial production figure was released for that nation. In Europe, the major bourses put in a weak session, as well, with sharp losses on France’s CAC-40. Concerns about the region’s finances were likely still weighing on traders.

The economic reports issued in the U.S. were also disappointing. Traders probably took little notice of the lackluster personal income and spending reports for August (since the latter is adjusted for inflation). However, the economic environment in the Chicago region may not be recovering as fast as hoped.  Notably, the Chicago PMI slipped to 49.7 in September, versus the 53.0 figure reported in August.  Further, the consumer may not be feeling too much better, as the University of Michigan’s Consumer Sentiment report registered a final reading of 78.3 for September, which was just under the previous estimate.

There were some notable corporate reports put out today. Nike (NKE) stock is moving lower on concerns about margins and orders. Also in footware, Finish Line (FINL) shares are off, despite a decent profit report.  - Adam Rosner

 At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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Stocks to Watch from The Survey Of the companies that reported quarterly earnings last night or this morning, troubled smartphone maker Research In Motion (RIMM) looks to be the big winner. The company delivered better-than-expected sales and a narrower-than-anticipated loss in the August quarter. The stock is soaring in the premarket, albeit from very depressed levels. Investors were also pleased with August-quarter financials from The Finish Line (FINL), a mall-based retailer of footwear, activewear, and accessories, and the stock is indicating a nicely higher opening this morning. On the other hand, Nike (NKE), the athletic footwear, clothing, and equipment giant, delivered lackluster quarterly results. Profits fell from the year-earlier figure and the gross margin narrowed. That stock is moderately lower in pre-market trading. Shares of drugstore operator Walgreen Co. (WAG) are also moving modestly lower this morning on earnings news.

In other news, one of the nation’s largest banks, Bank of America (BACFree Bank of America Stock Report), has agreed to settle a class action lawsuit related to its 2009 purchase of Merrill Lynch for about $2.4 billion which, management noted, will likely cut third-quarter earnings by roughly $0.28 a share. The stock is trading slightly lower in the premarket. – Matthew E. Spencer

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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Before The Bell - Stocks broke their mini-losing streak yesterday, and did so in rather encouraging fashion, with the major equity averages moving decisively higher from the outset and staying comfortably in positive territory throughout the session. By the day's close, the 30-stock Dow Jones Industrial Average was ahead by 72 points; the Standard and Poor's 500 Index was in the plus column by 14 points; and the NASDAQ, boosted by another strong gain in the shares of tech-stalwart Apple Inc. (AAPL), was better by a resounding 43 points, or 1.4%. Moreover, gainers swamped losers by some three-to-one on both the Big Board and the NASDAQ, as there were few places for the chastened bears to hide--at least for one day.

Helping the market yesterday was a report out of Spain, one of the more ailing euro-zone members, that the nation's 2013 budget plan contained severe cuts and measures intended to convince international authorities that the country is most serious about attaining its deficit-reduction targets next year. The markets also were underpinned by news out of China that the country's central bank was pumping record amounts of liquidity into the banking system in an effort to jump start an economy that is now pressing ahead at a more sluggish rate. 

However, these gains came amidst further signs that our own economy is slowing down, albeit still pushing forward. Specifically, at 8:30AM (EDT) the Commerce Department reported that the nation's second-quarter gross domestic product had been revised lower to show an advance of just 1.3%. Earlier, the first, or flash, estimate of GDP growth had shown a 1.7% gain; a month later that figure had again shown a 1.7% rate of improvement. However, in this latest, or final, revision, GDP was, as noted, revised down to indicate a much less definitive advance. At the same time, the government also reported a sharp decline in durable goods orders for August. Expectations had been that this volatile series would have indicated a moderate drop of some 5%. Ominously, the actual reported decline was estimated at more than 13%, principally on a sharp drop in airplane orders and an overall retrenchment in capital goods demand. These surveys more than trumped a better report on jobless claims issued at that hour.

These sobering metrics put some validity behind the Federal Reserve's recent decision to commence a third round of quantitative easing, as the economy, which just weeks ago seemed on course to perhaps grow by close to 2% in the current half, may now improve by closer to 1.5%--if even by that much. We also tentatively see that unprepossessing rate of gain in place in 2013's first half, assuming that the feared fiscal cliff of mandated spending cuts and tax hikes can be avoided via timely action by the Congress following the November elections. 

As to other news, there is little of note on the profit front, as we await the pending start of third-quarter profit reporting season. That quarterly event is about two weeks away from getting under way. 

As to the markets overseas, the European bourses were generally lower this morning, although earlier we did see some narrow strength in the London FTSE 100. On the other hand, the Frankfurt DAX is moderately lower, while the Paris CAC-40 is off by more than a percentage point. And over here, a minuscule gain in August's personal income, a metric that was just reported, has helped to push our futures notably lower with about a half hour to go before the opening of the new trading day.   - Harvey S. Katz

At the time of this article's writing, the author did not have positions in any of the companies mentioned.